International Expansion 6K AR TELKOM2014

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3. International Expansion

International expansion is one of the steps to realize our objective To Become a leading TIMES player in the region. We are developing and expanding our business outside of Indonesia to broaden and diversify our market. By expanding internationally, we are also preparing our human resources to be ready in facing the ASEAN Economic Community which will begin by the end of 2015. Through our subsidiary, PT Telekomunikasi Indonesia International Telin, we have strengthened our presence in the region with a profitable business model and well-managed risks. We operate Mobile Virtual Network Operator MVNO schemes in four countries, namely Malaysia, Hong Kong, Macau, and Saudi Arabia. We also operate a Mobile Network Operator MNO in Timor Leste, provide Business Process Outsourcing BPO services in Australia and New Zealand, and have other telecommunications- related businesses in Taiwan, Myanmar and the United States. The international markets offer significant business opportunities. In addition, to develop Indonesia into a “hub” for data communication traffic in the region, we are developing the Indonesia Global Gateway IGG to connect Indonesia to Middle East and West Europe via the SEA-ME-WE 5 submarine cable communications system, and to connect Indonesia to the United States via the SEA-US submarine cable communications system. - 10 - Table of Content - 11 - Table of Content ANNUAL REPORT TELKOM HIGHLIGHTS PT Telkom Indonesia Tbk Persero, or referred to as Telkom, Company, or we, presents the Annual Report for the year ended on December 31, 2014, prepared in accordance with the Decree of the Financial Services Authority OJK, replacement of Bapepam-LK number X.K.6 and X.K.7. Certain sections of this Annual Report also contains information published in the Form 20-F according to the regulation of the Securities and Exchange Commission SEC the United States. However, no part of this document are combined to refer to the Form 20-F. The information and data presented in this Annual Report is sourced on the Companys consolidated financial data and its subsidiaries. The term Indonesia in this Annual Report 2014 refers to the Republic of Indonesia while the Government means the Government of Indonesia, and the United States or US means the United States. The mentioning of the currency unit of Rupiah or Rp refers to the lawful currency of Indonesia, while US Dollar or US are to the lawful currency of the United States. Certain figures including percentages have been rounded. Unless otherwise stated, all financial information is presented in Rupiah in accordance with Indonesia Financial Accounting Standards IFAS. This Annual Report contains statements that are forward looking, including expectations and projections about the operating performance and business prospects in the future. Statements such as these generally uses words such as believe, expect, anticipate, estimate, projecting or other similar words. In addition, all statements that are not historical facts, in this Annual Report can be categorized as forward-looking statements. Although we believe that the expectations in the statement containing the forward looking is quite reasonable, We can not guarantee that these expectations will prove correct. Statements containing forward looking contains risks and uncertainties, including the effect of changes in the economic, political and social environment in Indonesia. In the section Risk Management and other sections of this Annual Report disclosed the important factors that could cause actual results that differ materially from our expectations. For more information about Telkom’s Annual Report, you can contact our Investor Relations at Graha Merah Putih 5 th Floor, Jl. Jend. Gatot Subroto Kav. 52 Jakarta 12710, Indonesia. Tel: +62-21-5215 109, Fax: +62-21-5220 500 or e-mail: investortelkom.co.id. You can also download this document online through our website at http:www.telkom.co.id - 12 - Table of Content ANNUAL REPORT SUMMARY Telkoms Achievements in 2014 In 2014, we were able to record an excellent performance, achieving growth above the industry average. This achievement is a result of our investment in developing broadband infrastructure and a manifestation of our commitment to become a leading player in the digital business. In 2014, the contribution of our digital business revenue increased significantly to 32.5 compared to 28.2in the previous year.  Revenue Rp89.7 trillion 8.1  Asset Rp140.9 trillion 10.1  Mobile users 67.9 million 12.1  Numbers of cellular BTS 85,420 BTS 22.3 - 13 - Table of Content FINANCIAL AND PERFORMANCE HIGHLIGHTS FINANCIAL HIGHLIGHTS Consolidated Statements of Comprehensive Income in billions of Rupiah, except for net income per share and per ADS Years ended December 31, 2014 2013 2012 2011 2010 Total Revenues 89,696 82,967 77,142 71,253 68,629 Total Expenses 61,393 57,700 54,004 49,960 46,240 Adjusted EBITDA 46,508 43,626 40,154 36,821 37,549 Operating profit 29,377 27,846 25,697 21,958 22,937 Profit for the year 21,445 20,290 18,361 15,470 15,870 Profit for the year attributable to: Owners of the parent company 14,638 14,205 12,850 10,965 11,537 Non-controlling interest 6,808 6,085 5,512 4,505 4,333 Total comprehensive income for the year 21,471 20,402 18,387 15,481 15,904 Total comprehensive income attributable to: Owners of the parent company 14,663 14,317 12,876 10,976 11,571 Non-controlling interest 6,808 6,085 5,512 4,505 4,333 Net income per share 149.8 147.4 133.8 111.9 117.3 Net income per ADS 1 ADS : 200 common stock 29,966.7 29,483.6 26,767.6 22,386.8 23,461.6 Consolidated Statements of Financial Position in billions of Rupiah Years ended December 31, 2014 2013 2012 2011 2010 Assets 140,895 127,951 111,369 103,054 100,501 Liabilities 54,770 50,527 44,391 42,073 44,086 Equity attributable to owners of the parent company 67,807 60,542 51,541 47,510 44,419 Net working capital Current Asset - Current Liabilities 1,976 4,638 3,866 931 1,744 Investment in associate entities 1,767 304 275 235 254 - 14 - Table of Content Capital Expenditures in billions of Rupiah Years ended December 31, 2014 2013 2012 2011 2010 Telkom 8,099 5,313 4,040 4,202 3,623 Telkomsel 13,002 15,662 10,656 8,472 8,197 Others Subsidiaries 3,560 3,923 2,576 1,929 831 Total 24,661 24,898 17,272 14,603 12,651 Consolidated Financial and Operational Ratios Year ended December 31, 2014 2013 2012 2011 2010 Return on Asset ROA 1 10.4 11.1 11.5 10.6 11.5 Return on Equity ROE 2 21.6 23.5 24.9 23.1 26.0 Operating Profit Margin 3 32.8 33.6 33.3 30.8 33.4 Current Ratio 4 106.2 116.3 116.0 95.8 91.5 Total Liabilities to Equity 5 80.8 83.5 86.1 88.6 99.3 Total Liabilities to Total Assets 6 38.9 39.5 39.9 40.8 43.9 1 ROA is calculated as profit for the year attributable to owner of the parent company divided by total assets at year end December 31. 2 ROE is calculated as profit for the year attributable to owners of the parent company divided by total equity attributable to owner of the parent company at year end December 31. 3 Operating Profit Margin is calculated as operating profit divided by revenues. 4 Current Ratio is calculated as current liabilities divided by current liabilities at year end December 31. 5 Liabilities to Equity Ratio is calculated as total liabilities divided by total equity attributable to owners of the parent company at year end December 31. 6 Liabilities to total assets ratio is calculated as total liabilities divided by total assets at year end December 31. - 15 - Table of Content BUSINESS AND OPERATIONAL HIGHLIGHTS Unit Years ended December 31, 2014 2013 2012 Broadband Subscribers Fixed broadband Speedy 000 subscribers 3,400 3,013 2,341 Mobile broadband Flash 000 subscribers 31,216 17,271 11,039 Blackberry 000 subscribers 5,835 7,556 5,764 Total Broadband Subscribers 000 subscribers 40,451 27,840 19,144 Cellular Subscribers Postpaid kartuHalo 000 subscribers 2,851 2,489 2,149 Prepaid simPATI, Kartu As 000 subscribers 137,734 129,023 122,997 Total Cellular Subscribers 000 subscribers 140,585 131,513 125,146 Fixed Line Subscribers Fixed wireline 000 subscribers 9,698 9,351 8,946 Fixed wireless 000 subscribers 4,404 6,766 17,870 Total Fixed Line Subscribers 000 subscribers 14,102 16,117 26,816 Other Subscribers Datacomm 000 Mbps 930,327 381,440 281,063 Satellite transponder 000 MHz 3,560 3,007 2,650 Network BTS unit 85,420 75,579 60,011 Customer Services PlasaTelkom location 572 572 572 Grapari location 88 86 85 Mobile Grapari unit 268 268 - Employees people 25,284 25,011 25,683 Related to ReFlexi Program, hence since 2014 base stations that we disclose was cellular BTS - 16 - Table of Content STOCK HIGHLIGHTS The following figures are the report of the highest, lowest, and closing of stock price, trading volume, outstanding shares and market capitalization of common stock listed on the Indonesia Stock Exchange IDX for the periods indicated: Price per Share of Common Stock Volume shares Outstanding Shares Market Capitalization Rp billion Calendar Year High Low Closing in Rupiah 2010 1,960 1,390 1,590 28,539,250,000 98,347,123,900 160,272 2011 1,610 1,320 1,410 22,207,895,000 96,931,696,600 142,128 2012 1,990 1,330 1,810 23,002,802,500 95,745,344,100 182,448 2013 2,580 1,760 2,150 27,839,305,000 97,100,853,600 216,720 First Quarter 2,230 1,760 2,200 5,993,025,000 95,745,344,100 221,760 Second Quarter 2,580 1,900 2,250 8,265,647,500 96,044,401,100 226,800 Third Quarter 2,450 1,950 2,100 7,206,438,500 97,100,853,600 211,680 Fourth Quarter 2,375 1,980 2,150 6,374,194,000 97,100,853,600 216,720 2014 3,010 2,060 2,865 24,035,761,600 98,175,853,600 288,792 First Quarter 2,420 2,060 2,215 6,647,275,800 97,100,853,600 223,272 Second Quarter 2,700 2,150 2,465 6,736,807,600 98,175,853,600 248,472 Third Quarter 3,010 2,465 2,915 5,313,076,900 98,175,853,600 293,832 Fourth Quarter 2,930 2,590 2,865 5,338,601,300 98,175,853,600 288,792 September 3,010 2,675 2,915 1,769,250,600 98,175,853,600 293,832 October 2,930 2,680 2,750 2,482,524,900 98,175,853,600 277,200 November 2,830 2,590 2,825 1,559,250,500 98,175,853,600 284,760 December 2,890 2,725 2,865 1,296,825,900 98,175,853,600 288,792 2015 January 2,930 2,780 2,830 1,403,802,200 98,175,853,600 285,264 February 3,020 2,800 2,935 1,785,881,500 98,175,853,600 295,848 - We conducted a 1:2 ratio of our common stock from a nominal value of Rp500 per share to Rp250 per share as resolved by the AGMS on July 30, 2004, effective October 1, 2004. - We conducted a five for one split of our common stock from a nominal value of Rp250 per share to Rp50 per share as resolved by the AGMS on April 19, 2013, effective September 2, 2013 . - The price per share of the common stock reflects this two splits above for all periods shown. - Market capitalization is multiplying between the share price and issued and fully paid shares which is 100,799,996,400 shares. On December 30, 2014, the last trading day in the IDX in 2014, the closing price for our common stock was Rp2,865 per share. - 17 - Table of Content In the table below, we present the ADS price high, low, and closing and ADS trading volume on the New York Stock Exchange NYSE and the London Stock Exchange LSE for the indicated periods. In the LSE, Telkom ADS is traded over the counter OTC, meaning that the transaction occurs off exchange. After a transaction has taken place, then it is reported to the LSE. Price per ADS NYSE Volume in ADS Price per ADS LSE Volume in ADS Calendar Year High Low Closing High Low Closing in US Dollars in US Dollars 2010 43.80 30.33 35.65 69,803,576 42.00 30.76 34.91 19,673 2011 36.96 30.29 30.74 69,279,100 35.89 21.02 30.50 1,406,292 2012 41.14 29.26 36.95 88,190,589 40.12 30.24 36.50 746,278 2013 50.61 33.75 35.85 67,061,105 50.59 33.44 35.33 6,579,103 First Quarter 45.32 36.17 45.08 13,876,752 45.83 37.06 45.28 12,819 Second Quarter 50.61 38.75 42.74 15,688,290 50.59 39.31 45.34 6,465,258 Third Quarter 47.20 34.54 36.31 18,713,653 47.44 35.62 36.27 79,240 Fourth Quarter 41.69 33.75 35.85 18,782,410 41.69 33.44 35.33 21,786 2014 48.75 33.91 45.23 52,250,948 43.75 38.42 - 12,008 First Quarter 40.59 33.91 39.37 16,346,799 39.55 38.42 39.55 986 Second Quarter 44.45 39.00 41.66 16,409,533 43.75 39.95 43.00 11,022 Third Quarter 48.75 41.69 48.10 9,670,921 - - - - Fourth Quarter 48.43 42.29 45.23 9,823,695 - - - - September 48.75 44.85 48.10 2,722,429 - - - - October 48.43 44.26 45.35 4,383,362 - - - - November 46.39 34.70 36.54 5,866,608 - - - - December 46.89 42.29 45.23 3,254,644 - - - - 2015 January 47.07 43.84 44.10 3,796,653 - - - - February 45.42 44.82 44.91 128,606 - - - - The last trading day in the NYSE in 2014, was on December 31, and the closing price for one Telkom ADS was US45.23. Effective from June 5, 2014, due to the low level of our ADSs traded, we delisted our ADSs listing from London Stock Exchange. The closing price of Telkom ADS last transaction on the LSE for our ADS on June 4, 2014 was US43.00. - 18 - Table of Content BONDS HIGHLIGHTS The following table was bond summary: Bond Out standing Rp million Issuance Date Maturity Date Term Year Interest Rate Underwriter Trustee Rating Telkom’s Bond II 2010 Serie A 1,005,000 June 25, 2010 July 6, 2015 5 9.6 PT Bahana Securities; PT Danareksa Sekuritas; PT Mandiri Sekuritas PT CIMB Niaga Tbk id AAA Telkom’s Bond II 2010 Serie B 1,995,000 June 25, 2010 July 6, 2020 10 10.2 PT Bahana Securities; PT Danareksa Sekuritas; PT Mandiri Sekuritas PT CIMB Niaga Tbk i d AAA DIVIDEND HIGHLIGHTS Dividend Year Date of AGMS Payout Ratio 1 Amount of Dividends Rp million Dividend per Share after stock split Rp 2009 June 11,2010 50 5,666,070 57.61 2010 May 19, 2011 55 6,345,350 2 64.52 2011 May 11,2012 65 7,127,333 3 74.21 2012 April 19, 2013 65 8,352,597 4 87.24 2013 April 4, 2014 70 9,943,294 5 102.40 1 Represents the percentage of profit attributable to owners of the parent paid to shareholders in dividends. 2 Including interim cash dividend paid in December 2010 and January 2011 amounting to Rp276,072 million and Rp250,085 million respectively. 3 Consists of cash dividend amounting to Rp6,030,820 million and special cash dividend amounting Rp1,096,513 million. 4 Consists of cash dividend amounting to Rp7,067,582 million and special cash dividend amounting Rp1,285,015 million. 5 Consists of cash dividend amounting to Rp7,812,588 million and special cash dividend amounting Rp2,130,705 million. The Annual General Meeting of Shareholders “AGMS” has the authority to determine the amount of dividends we pay. Our dividend payout ratio for 2014 will be decided at the AGMS scheduled for 2015. Telkomsel Dividend Pursuant to AGMS on April 1, 2014, Telkomsel approved the payment of a cash dividend of Rp15,612 billion, which represented 90 of Telkomsel’s net profit in 2014, Rp4,917 billion of this dividend was distributed to Singapore Telecom Mobile Pte Ltd “SingTel Mobile”. In 2012, 2013, and 2014 cash dividends were paid to SingTel Mobile, a non-controlling shareholder of Telkomsel, amounting to Rp3,231.2 billion Rp4,675 billion and Rp4,917 billion. - 19 - Table of Content MANAGEMENT REPORT REPORT OF THE BOARD OF COMMISSIONERS To Realize the Expectation as the Leading Digital Company Throughout 2014, the Company continued its excellent performance, growing at a rate above the industry average. In light of its performance achievement, we believe the Company is on track to realize its hopes of becoming a Digital Company. In line with our vision, Telkom is making the most of all its potential to strengthen its presence in the region. Esteemed Shareholders and Stakeholders, The world economic situation in general in 2014 saw a weakness, especially in Europe and some of the key Asian countries such as Japan and China, despite a significant economic recovery in the United States of America. The Indonesian economy was still growing quite well thanks to the relatively stable domestic consumption as a result of activities relating to the democratic general election in 2014. Meanwhile, the Indonesian telecommunications industry in 2014 was marked by a consolidation which resulted in a reduced number of players in the industry. We hope this is a part of the governments efforts to build a healthier telecom industry in the future. Views on Business Prospects Apart from a number of challenges, such as competition in the mobile and fixed broadband industry, we assess that the Company has good prospects. The telecommunications industry in Indonesia still offers great opportunities to grow. Currently the greatest opportunity arises from the fact that the mobile broadband penetration and consumption are still relatively low. The Company also has assets in the fixed line business, which if managed with the right strategy will bring substantial growth potential. Other opportunities arise from the possibility of international expansion that has significant potential to be explored and developed. The BOC has assessed the adequacy of the Board of Directors in mapping various scopes that affect the Company’s growth expectations. The Board also considers that the Board of Directors has set targets based on the results of analysis of various aspects, including the internal and external conditions of the Company. View on the Companys Performance in 2014 The Company recorded a very good performance in 2014 with revenue growth surpassing the industry average. The Companys performance was especially supported by our subsidiary PT Telekomunikasi Selular Telkomsel, a mobile cellular operator, which continued excellent performance with revenues, EBITDA and Net Income growing by double digits. Other businesses in the areas of fixed line, telecommunications infrastructure and other business units also grew quite well. The BOC believes that this performance achievement shows that the Company has the right strategies and also has had the ability to execute these strategies well. The Company’s three main programs, namely strengthening Telkomsel in order to continue recording performance higher than the industry’s performance, building and utilizing the Indonesia Digital Network to realize the digital society, and expanding its presence in the regional and international markets. In the future, the Company will continue using this strategy to create a better performance. Corporate Governance and Oversight by the Board of Commissioners The Company continues upholding the application and enforcement of good corporate governance in accordance with best practices, which provides a solid foundation for the Company to continue growing sustainably in the future. So far, the Company has practiced good corporate governance, as reflected in a number of prestigious awards in the field of corporate governance application in 2014, including the award of Indonesia Sustainability Reporting Awards ISRA, CGPI and five other awards in Finance Asia Best Managed Company in 2014. In the future, the Company will continue strengthening its good governance practices in conformity with the best standards to ensure that the Company is well managed and accountable. - 20 - Table of Content View on Performance of Committees under the BOC In carrying out its oversight function, the Board is assisted by committees under its aegis, namely the Audit Committee, Risk Monitoring Committee as well as Remuneration and Nomination Committee, which have worked very well and provide optimal support to the Board of Commissioners so that the board can perform its tasks and functions to oversee the management of Telkom Indonesia in 2014. Some of the key areas of oversight tasks are implementation of the corporate action, organizational transformation, modernization of the network, international business development, and working performance of the subsidiary. The Board of Commissioners also provides advice to the Board of Directors to ensure that the business strategy and good corporate governance have been executed correctly. Supervision and advice of the Board of Commissioners are delivered either through the Audit Committee, Risk Monitoring Committee, or the Nomination and Remuneration Committee. Changes in Composition of the Board of Commissioners In 2014 there was a change in the composition of the Board of Commissioners. The General Meeting of Shareholders AGM on April 4, 2014 approved the resignation of Mr. Gatot Trihargo and appointed Mr. Imam Apriyanto Putro as a Commissioner. Pursuant to the AGM on April 4, 2014, the Board of Commissioners comprised the following members: Jusman Syafii Djamal Parikesit Suprapto Hadiyanto Imam Apriyanto Putro Johnny Swandi Sjam Virano Gazi Nasution : : : : : : President Commissioner Commissioner Commissioner Commissioner Independent Commissioner Independent Commissioner The composition of the Board of Commissioners was further changed based on the results of the Extraordinary General Meeting held on December 19, 2014, which approved the resignation of Jusman Syafii Djamal and appointed Mrs. Hendri Saparini as a Commissioner of the Company. The EGM also approved the appointment of Mr. Dolfie Othniel Fredric Palit as a Commissioner, increasing the number of members of the Board of Commissioners from six to seven people, as follows: Hendri Saparini Dolfie Othniel Fredric Palit Imam Apriyanto Putro Hadiyanto Parikesit Suprapto Johnny Swandi Sjam Virano Gazi Nasution : : : : : : : President Commissioner Commissioner Commissioner Commissioner Independent Commissioner Independent Commissioner Independent Commissioner Target in the Future The BOC assessed that the Companys business portfolios, consisting of Telecommunication, Information, Media Edutainment, and Services TIMES, should be strengthened by creating synergies among the subsidiaries, considering that the industry will be more competitive in the future. The mobile business, as a major contributor to the Company, must be strengthened to protect against the changes in the legacy business segments, and the Company should also aggressively grow its digital business segment. The development of Indonesian Digital Network should bring business and economic benefits for the Company and Indonesian society in general. In addition, the Company has to be well-prepared to be able to expand internationally, so that the Company can represent Indonesia in Asia. - 21 - Table of Content Appreciation to Stakeholders On this auspicious occasion, the Board expressed thanks and appreciation to Mr. Gatot Trihargo and Mr. Jusman Syafii Djamal who have carried out their duties as members of the Board of Commissioners. Their role and contributions have helped delivered outstanding performance in 2014. The Board also thanks and gives greatest appreciation to the Board of Directors, who has worked hard to record a very good performance. In particular, the Board congratulates Mr. Arief Yahya, Director of the Company until the 2014 EGMS, on his appointment as the Minister of Tourism. The BOC regards his appointment as a minister as the trust of the nation toward the Companys performance. Thanks and deepest appreciations also go to all management and employees of Telkom Indonesia for their dedication and hard work so that 2014 be a very good year. Hopefully the performance achievement in 2014 spurs the spirit of all stakeholders to carve a better performance again in 2015. Jakarta, March 26, 2015 On behalf of the Board of Commissioners, Hendri Saparini The President Commissioner - 22 - Table of Content REPORT OF THE PRESIDENT DIRECTOR To Drive Digital Business to Create Sustainable Competitive Growth Telkom recorded excellent financial and operational performances in 2014, along with the high performance of its subsidiary PT Telekomunikasi Selular Telkomsel. At the same time, Telkom has aggressively continued developing broadband infrastructure to support its digital business growth in the future. Esteemed Shareholders and Stakeholders , On behalf of the Board of Directors of PT Telkom Indonesia Persero, allow us to report the Company’s management during 2014 and their key performance achievements to both shareholders and stakeholders. Macroeconomic conditions and Telecommunications Industry 2014 Throughout 2014, the Indonesian economy grew quite healthily, with gross domestic product rising by 5.1, particularly supported by domestic consumption, one of which was the telecommunications sector. In line with the growing middle class whose needs for various telecommunications services increased remarkably, the telecommunications sector grew by 9.1, which was higher than the national economic growth. The telecommunications industry itself has been very dynamic, consequently requiring industry players to adapt very quickly as well. Telecommunications customer demand has shifted from the legacy of voice and SMS to data services. The growth of youth segment, accompanied by an increasing number of middle class with the characteristics of a digital lifestyle, has increasingly pushed high demand for data services. Meanwhile, the performance of voice and SMS services was limited by the presence of various replacement applications such as instant messaging applications. The SIM-card penetration rate was estimated to have exceeded 125 in 2014, indicating a relatively high degree of saturation. In the future, the growth of the telecommunications industry will be supported by growth in the digital business. Penetration of data users in Indonesia is still relatively low at about 50 presently, with the use of smartphone also still low at less than 30 in spite of rapid increases in adoption in recent years. Data traffic increased significantly, more than 100 year on year, mainly driven by the use of data via smartphones. At the same time, the telecommunications industry in Indonesia has to face many challenges. Among the most important challenge is the emergence of Over the Top OTT services that offer substitutes for traditional voice and SMS services. In addition, the weakening of the Rupiah against the US dollar is also potentially detrimental to industry players given that most of the capital expenditures capex in the telecommunications sector are in foreign currencies, especially the US dollar. Furthermore, the implementation of the ASEAN Economic Community AEC in 2015 would certainly provide a significant challenge, given the competition area becomes wider, namely in the ASEAN region. The Indonesian telecommunications sector in 2014 was characterized by an industry consolidation. We see consolidation in the telecommunications sector has resulted in a reduced number of players in this industry, which is expected to have a positive impact for the creation of a more healthy competition level. Strategic Work Program In order to maintain sustainable growth, in 2014, we continued implementing the Three Main Programs, namely: double-digit growth in Telkomsels cellular business, broadband network development on the Indonesia Digital Network platform, as well as international expansion. Telkomsel is still the backbone of our revenues, contributing an approximately 60 of our consolidated revenues. In line with the potential growth of mobile data services, Telkomsel’s strategy is to build the infrastructure to meet the demand for traffic data, which has been growing very significantly, to ensure that Telkomsel’s customers get the best mobile data experience. Between 60 and 65 of our capital expenditure is allocated to Telkomsel. In addition, Telkomsel is also still trying to exploit the revenue growth from voice and SMS services such as through intelligent pricing strategy based on cluster, which analyze various factors, including competition level and network utilization in each cluster. - 23 - Table of Content The Indonesia Digital Network or IDN program is the infrastructure foundation to support data services for our mobile and fixed-line businesses. Telkom has focused on providing the best experience for its customers, by building broadband network infrastructures that is superior in terms of coverage, capacity and capability. IDN consists of Id-Access, a high-speed broadband access via optical fiber network, Id-Ring, a nationwide fiber optic backbone network based on internet protocol IP, and Id-Convergence, a high-capacity data center that is integrated with Telkoms network. In addition, we have also expanded our business internationally, and strengthened our regional presence with a business model that is profitable with well-managed risks. Under the mobile virtual network operator MVNO scheme, Telkom is present in four countries namely Malaysia, Hong Kong, Macau and Saudi Arabia. Telkom also has a subsidiary that operates fully as a mobile network operator in Timor Leste. In addition, we are present in Australia and New Zealand, providing Business Process Outsourcing services, as well as in several other countries where we have satellite and network-related businesses. With all of the above programs, we aim to achieve the goal of becoming a digital company, with the main benchmark to have the digital business contribute to more than half of our total business. We hope we can achieve our aim to become a digital company in the next few years. Company Performance in 2014 Looking at our performance in 2014, weve been on the right track in achieving the goal of becoming a digital company. On a consolidated basis, the contribution of the data, internet and IT segment increased to 26.9 from 23.5 in the previous year, while contribution of the digital business segment in our cellular subsidiaries has significantly increased to approximately 23.6 from 19.4 last year. Our digital business revenue growth was supported by data users, with the number of data users increasing by 12.1 to 71.1 million subscribers by the end of 2014. We recorded excellent financial performance in 2014. Our consolidated revenue grew 8.1 to reach Rp89.7 trillion. The Data, Internet IT segment excluding SMS grew by 24.0, the highest increase among our business lines, due to the increase in demand for this segment and excellent infrastructure support. We were also able to manage costs efficiently, with operating costs growing by only 6.5 to Rp43.9 trillion. We were therefore able to record a fairly high EBITDA growth of 9.7 to Rp45.8 trillion, with EBITDA margin of 51.1, which was better than the previous years margin of 50.4. Our Net Income increased 3.0 to Rp14.6 trillion in 2014. The relatively low growth in net profit was mainly because of the proceeds from the divestment of 80 ownership of Telkom Vision in 2013. From the operational aspect, our subsidiary, Telkomsel, continued strengthening its network infrastructure so that by the end of 2014 it had 85,420 BTS, an increase of 22.3 from the previous year, of which 45 was 3G base stations and 200 4G base stations, which was aimed at supporting growth in data services. Data traffic increased significantly by 143 to 235 Peta-Bytes, mainly triggered by the use of data services via smartphones. By the end of 2014, Telkomsel smartphone users totaled 40.4 million, a 71 increase from the previous year. To maintain Telkomsels position as the market leader, we always adopted the most advanced technology. In December 2014, Telkomsel successfully performed the first commercial 4G services launch in Indonesia to enhance customer experience in using data services. In 2014, we decided to discontinue our fixed wireless services, namely Flexi by 2015, and encourage Flexi customers to switch to our mobile subsidiary Telkomsel. In addition, the 800MHz spectrum previously used by Flexi has been decided by the Government to be allocated to Telkomsel. We believe that the termination of our fixed wireless services will be compensated by the strengthening of mobile services so that overall it would be optimal for us. We have further strengthened broadband infrastructure to support our digital services business, both for the needs of the cellular and fixed line business units. By the end of 2014, we have built 76,700 km of our nationwide fiber-based backbone network connecting the Indonesian region of Aceh to Papua, as well as installing 170,000 Wi-Fi access points. We have also had fiber that passed more than 13.2 million homes at the end of 2014. In addition, we have developed a 54,800 m 2 data center to meet the demand for cloud services. - 24 - Table of Content We consistently maintain the level of capital expenditure to sufficiently support growth. Throughout 2014, we spent Rp24.6 trillion, which was relatively stable compared to Rp24.9 trillion in the previous year, in building infrastructure with a focus on supporting data services. Approximately 60 of the capital expenditure was allocated to build mobile business-related infrastructure. Approximately 20 was used for infrastructure development to strengthen the fixed broadband business lines and access strengthening, while the rest was used for business development entities of other subsidiaries in the field of telecommunication towers, information technology, and international expansion. In 2014 we completed several corporate actions in order to create value through synergies with our business units. These include: the purchase of a 25 stake in Tiphone Mobile Indonesia Tbk, which is one of the largest distributors of gadgets in Indonesia; the establishment of a Joint Venture Company between Telkom Metra and the largest operator of Australia, Telstra; as well as the acquisition of a 75 stake in Contact Centres Australia Pty Ltd CCA. Company Prospects With our investments in the past several years, particularly to build broadband infrastructure, we believe that the Company has good prospects. For our mobile business unit, nearly half of Telkomsels BTS supported data services. With approximately 50 of user being data users and smartphone penetration still low at about 30, the data business segment has a very high growth potential, in light of the data traffic growth over the past year of more than 100. We also have excellent IT skills to support complex pricing strategies for voice and SMS services so that we can exploit the growth of legacy businesses. We also have assets in the fixed line business unit, which if managed with the right strategies will bring substantial growth potential. We will put all our efforts to revive the fixed line business through IndiHome, which is our product bundling that consists of fixed voice, the internet and IP TV services. We also plan to grow inorganically through international expansions, which have significant potential to be explored and developed. Through our international business unit of PT Telkom Indonesia International, we have been present in 10 countries with a variety of business models. We will widen and strengthen the business in the countries where we have had the track record, as well as seek new business opportunities to be developed. We are committed to expanding our market, diversifying our business and strengthening our human resources so as to be ready in facing the ASEAN Economic Community in 2015. Corporate Governance We uphold the application of Good Corporate Governance GCG, and have been consistently increasing its implementation from year to year. One of our significant developments in the implementation of GCG is the strengthening of organizational governance structure with a character of a holding company, through the implementation of the Executive Board mechanism for our subsidiaries. We have also implemented Enterprise Risk Management ERM as a whole, producing an integrity pact within the scope of the group, strengthening IT governance, and remediation of internal controls to ensure the reliability of financial statements. As part of the implementation of GCG practices, since 2010 we have adopted the standards of the International Financial Reporting Standards IFRS. We have met the criteria of the ASEAN Corporate Governance Scorecard, which assesses the quality of the GCG implementation in public companies in six ASEAN countries. Recognition of the quality of our GCG implementation is reflected in the awards we have received. In 2014 we received the Most Trusted Company, which is the sixth consecutive time weve received the award. In addition, at the IMAC 2014 awards, we simultaneously achieved awards for Best Managed Companies, Best Corporate Governance, Best Investor Relations, Best CSR, and the Most Committed to a Strong Dividend. In the Public Company Awards 2014, we were awarded Best Listed Company of the Year, The Best CEO of Listed Company 2014, the CEO of the Year, and the first winner of the category of Corporate Communications, Risk Management, and Infrastructure Working Group. We also received an award for the Most Trusted Company for six consecutive times in a survey of Corporate Governance Perception Index CGPI and Capital Market Award 2014 award for the category Large Companies on the Indonesia Stock Exchange. - 25 - Table of Content Corporate Social Responsibility We align our CSR activities with our vision and mission as well as our business portfolio. In defining our CSR, we have adopted the theme of Telkom Indonesia for Indonesia. Telkom CSR programs were undertaken in an effort to support the advancement of the welfare of the people of Indonesia including disadvantaged and remote communities, through a series of activities, based on the three main pillars of our CSR, aimed at developing the Digital Environment, Digital Society, and the Digital Economy. We seek to perform a variety of programs related to environmental preservation, which are summarized in our Telkom Go Green Action program. The program includes efforts to minimize carbon emissions, improve energy efficiency of office buildings, optimize energy efficiency of BTSs, increase use of renewable energy, encourage the concept of a paperless office, implement waste management and water management and recycle water. Of all the social development objectives channeled through the Community Development Program, we have prioritized the provision of assistance in the areas of education and health as well as development of creative camp facilities to cultivate the digital creative industries. From all these efforts, we obtained the grand Platinum award for awards in nine areas and categories in the Indonesian CSR Award 2014. The award is a testament to the achievement of our performance, which is in line with the ISO 26000-based CSR foundation. Human Resource Development Our human resource management strategy consists of three components, each with different weighting: character has the greatest weight 50, followed by competence, with a weight of 30, and coopetition, with a weight of 20. We are constantly developing leadership programs, based on the Telkom Group Leadership Architecture, with the philosophy of Always The Best through our Talent Development Framework. To develop globally competitive human resources, we also have a Global Leadership Capability Development program . This human resource development strategy is in line with our business transformation that focuses on TIMES. To anticipate the changing needs of competence, we strengthen the competence of human resources through structured and planned training and education, in order to prepare our human resources for the digital age. Each year, we provide employees with a variety of awards as a token of appreciation for their dedication and hard work. The success of our programs include, among others, nine employees receiving Satyalencana Pembangunan and Satyalencana Wira Karya awards from the Government of the Republic of Indonesia for their dedication in raising the name of Telkom. Corporate Culture Our corporate culture is embodied in The Telkom Way, which is the belief system and the reference values for all employees of Telkom, with supporting pillars for corporate culture comprising three core elements: namely Philosophy to be the Best, that contains basic philosophy for all employees to always provide their best; Principles to be the Star, which refer to three core values to be a star, known as 3S, for Solid, Speed, Smart; and Practices to be the Winner, which refer to key behaviors and practices to be winners. The concept for the development for the Telkom Groups organizational culture is based on the 8S elements, namely Spirituality, Style, Shared Values, Strategy, Staff, Skill, System and Structure. Changes in Composition of the Board of Directors Let us express our gratitude and highest appreciation to our predecessors on the board of directors, especially to Mr. Arief Yahya, who served as the President Director up to December 19, 2014. We should be proud because the best son of this Company has been entrusted as one of the ministers in the Cabinet. Thanks also go to Mr. Sukardi Silalahi, Mr. Rizkan Chandra, Mr. Priyantono Rudito, and Mr. Ririek Adriansyah, who had stints on the Board of Directors since their appointment by the General Meeting of Shareholders AGMS of Telkom on April 23, 2013 to the Extraordinary General Meeting of Shareholders EGMS of Telkom on December 19, 2014. Subsequently, since December 19, 2014, the composition of the new Board of Directors is as follows: Alex J. Sinaga Indra Utoyo Abdus Somad Arief Heri Sunaryadi Herdy Rosadi Harman Dian Rachmawan Honesti Basyir Muhammad Awaluddin : : : : : : : : President Director Director Director Director Director Director Director Director - 26 - Table of Content Appreciation On behalf of the entire ranks of the Board of Directors, we express our thanks and deepest appreciation to all shareholders, the Board of Commissioners, and all employees for their hard work and achievements of this remarkable performance. We also express great appreciation for the trust of customers and partners who have supported us throughout the year. Furthermore, we present the Company’s performance and achievements in 2014 comprehensively in this Annual Report, including the Financial Statements that consists of the consolidated statement of financial position and consolidated statement of comprehensive income for the financial year 2014. The Consolidated Financial Statements have been audited by Purwantono, Suherman Surja with an unqualified opinion. Jakarta, March 26, 2015 Alex J. Sinaga President Director - 27 - Table of Content GENERAL INFORMATION OF TELKOM INDONESIA TELKOM INDONESIA OVERVIEW Main player in Regional TIMES Business Telkom is a State-Owned Enterprises SOE which is engaged in the field of telecommunications and network services in Indonesia and therefore subject to the laws and regulations in Indonesia. With its status as a state-owned company whose shares are traded on the stock exchange, the Companys majority shareholder is the Government of the Republic of Indonesia at 52.56 while the rest 47.44 is controlled by the public. The Companys shares are traded on the Stock Exchange and the NYSE. We continue to innovate and develop synergies the entire product, services and solutions through our subsidiaries. We strengthen our organization with the formation of the Executive Board BOE. BoE facilitate parenting mechanism toward subsidiaries by grouping subsidiaries into four categories, namely cellular business, media, infrastructure, and international. Cellular business is led by PT Telkom Indonesia Cellular Telkomsel, the media business is led by PT Multimedia Nusantara TelkomMetra, the infrastructure business is under coordination of PT Indonesian Telecommunications Infrastructure TelkomInfra, while the international business is controlled by PT Telkom Indonesia International Telin . We have a vision of To Become a Leading Telecommunications, Information, Media Edutainment and Services TIMES Player in the Region . The Companys mission is To Provide More for Less TIMES Services and To be the Role Model as the Best Managed Indonesian Corporation . To achieve the vision and mission, we conduct a thorough transformation in five aspects to address the challenges of global market to help the Company achieve sustainable competitive growths. The five aspects of transformations include transformation in human resources, business, structure, cultural and infrastructuresystems. Telkom Groups management concept is based on element of 8S, namely Spirituality, Style, Shared Values, Strategy, Staff, Skill, System, and Structure. TELKOM INDONESIA PROFILE Name of the Company :Perusahaan Perseroan Persero PT Telekomunikasi Indonesia Tbk Abbreviated Name :PT Telkom Indonesia Tbk Persero Commercial Name :Telkom Line of Business :Telecommunication and network services Group of Business :Good and Service Trading Taxpayer Identification Number :01.000.013.1-093.000 Certificate of Company Registration :101116407740 Business License :5103-068920137985-BPPT Domicile :Bandung – West Java Address :Gedung Graha Merah Putih, Jl. Japati No. 1, Bandung, Indonesia 40133 Telephone :+62-22-4521404 Facsimile :+62-22-7206757 Call Center :147 Website :www.telkom.co.id Email : corporate_commtelkom.co.id , investortelkom.co.id Rating : id AAA Pefindo for 2012, 2013 and 2014 Date of Legal Establishment :November 19, 1991 Legal Basis of Establishment :Based on Government Regulation No.25 of 1991, we were converted from a state agency existing at that time to a state-owned limited liability corporation based on the Notarial Deed of Imas Fatimah, S.H. No. 128 dated September 24, 1991 which was approved by the Ministry of Justice of the Republic of Indonesia in Decree No.C2-6870.HT.01.01 year 1991 dated November 19, 1991 and published in State Gazette No.5 dated January 17, 1992, Supplement No.210. Amendments to our Articles of Association by notarial deed of A. Partomuan Pohan, S.H., LLM. No. 4 dated April 6, 2006 and published in the State Gazette of the Republic of Indonesia No.51 dated June 27, 2006, Supplement No.666, among other matters, changed the authority and responsibilities of our Board of Directors and Commissioners. Authorized Capital :1 Series A Dwiwarna share and 399,999,999,9999 Series B shares Issued and Fully Paid Capital :1 Series A share and 100,799,996,399 Series B shares - 28 - Table of Content Ownership :The Government of the Republic of Indonesia 52.56 Public 47.44 Stock Code :TLKM on Indonesia Stock Exchange “IDX”, Jakarta, Indonesia TLK on The New York Stock Exchange “NYSE”, New York, United State of America Listing on the Stock Exchange :The Companys shares were listed on the NYSE, Indonesia Stock Exchange then Jakarta Stock Exchange and Surabaya Stock Exchange which merged with the Jakarta Stock Exchange in 2007 on November 14, 1995. Service Offices :1 Head Office 7 Regional Division “Divre Offices and 58 Regional Telecommunications Witel Service Offices consisting of :572 Plasa Telkom outlets 1 Foreign GraPARI in Hong Kong 409 GraPARI including third party managed outlets 268 units Mobile GraPARI Stock Listed Indonesia Stock Exchange “IDX” New York Stock Exchange “NYSE” Since June 5, 2014, Telkom shares are no longer traded on the London Stock Exchange “LSE”, and since May 16, 2014, Telkom shares ceased to be registered on the Tokyo Stock Exchange “TSE” in Japan. Capital Market Profession Public Accountants Purwantono, Suherman, Surya Public Accountant Office Member Firm of Ernst Young Global Limited Registrar PT Datindo Entrycom Trustee PT Bank CIMB Niaga Tbk. Custodian PT Kustodian Sentral Efek Indonesia Rating Agency PT Pemeringkat Efek Indonesia Depositary Receipts The Bank of New York Mellon Details of capital market profession visible on General Information of Telkom Indonesia – Stock Information. - 29 - Table of Content TELKOM INDONESIA MILESTONES 1856-1884 On October 23, 1856, the Dutch Colonial Government deployed the first electromagnetic telegraph service operation in Indonesia, which connected Jakarta Batavia and Bogor Buitenzorg. We consider this event to be part of the beginnings of Telkom’s history and have thus adopted October 23 as the anniversary of our “beginning”. In 1884, the Dutch Colonial Government established a private entity, Post en Telegraafdienst to provide postal and telegraph services. 1906-1965 In 1906, the Dutch Colonial Government established a government agency to assume control postal services and telecommunications in Indonesia, named Jawatan Pos, Telegrap dan Telepon Post, Telegraph en Telephone DienstPTT. In 1961, its status was changed to newly-established state-owned company, Perusahaan Negara Pos dan Telekomunikasi PN Postel. In 1965, the Government separated postal and telecommunications services by dividing PN Postel into Perusahaan Negara Pos dan Giro PN Post Giro and Perusahaan Negara Telekomunikasi PN Telekomunikasi. 1974 PN Telekomunikasi was turned into Perusahaan Umum Telekomunikasi Indonesia Perumtel, which provided domestic and international telecommunications services, and subsequently spin-off PT Industri Telekomunikasi Indonesia PT INTI, which manufactured telecommunications equipment, into an independent company. 1991 Perumtel was transformed into a limited liability company and renamed Perusahaan Perseroan Persero PT Telekomunikasi Indonesia Telkom under Government Regulation No.25 of 1991. Our business operations was then divided into 12 telecommunication regions which was later reorganized in 1995 into seven regional divisions Divre, namely Divre I Sumatra, Divre II Jakarta and the surrounding areas, Divre III West Java, Divre IV Central Java and Yogyakarta, Divre V East Java, Divre VI Kalimantan, and Divre VII Eastern Indonesia. 1995 On May 26, 1995, we and Indosat established Telkomsel, our Initial Public OfferingIPO was on November 14, 1995, with our shares listed on the Jakarta Stock Exchange now Indonesia Stock Exchange and the Surabaya Stock Exchange SSX. Our shares were also listed on the NYSE and the LSE in the form of American Depositary Shares “ADSs”, and were publicly offered without listing on the Tokyo Stock Exchange. 1999 Law No. 361999 on the Elimination of Telecommunications Monopoly, which became effective in September 2000, facilitated the entrance of new players to foster competition in the telecommunications industry. 2001 We acquired 35 of Telkomsel shares from PT Indosat as part of the restructuring of the telecommunications service industry in Indonesia, which was characterized by the elimination of joint ownership and cross-ownership between us and Indosat. With this transaction, we controlled 77.7 shares in Telkomsel. Indosat then took over 22.5 of our shares in Satelindo and 37.7 of our shares in PT Lintasarta Aplikanusa. At the same time, we lost our exclusive rights as the sole operator of fixed line services in Indonesia. 2002 We divested 12.72 of Telkomsel shares to Singapore Telecom Mobile Pte Ltd Sing Tel Mobile, and were left with 65 of shares in Telkomsel. We acquired the entire share capital of PINS in three stages, with 30 of the shares acquired on the date of the contract on August 15, 2002, 15 on September 30, 2003 and the remaining 55 on December 31, 2004. 2004 We launched an international direct dialing service for fixed lines with the access code 007. - 30 - Table of Content 2005 TheTelkom-2 Satellite was launched to replace all satellite transmission services that were previously provided by Palapa B-4, which brought the total of satellite launched by us to eight satellites, including Palapa A-1. 2009 We underwent a transformation from an information telecommunication company to TIME Company. Our new image was introduced to the public with a new corporate logo and tagline of the world in your hand. 2010 The Submarine fiber optic cable project JaKaLaDeMa linking Java, Kalimantan, Sulawesi, Denpasar, and Mataram was successfully completed in April 2010. 2011 We commenced the reform of the telecommunications infrastructure through the Telkom Nusantara Super Highway project, which unites the archipelago from Sumatra to Papua, as well as the True Broadband Access project to provide Internet access with a capacity of 20-100 Mbps to customers throughout Indonesia. 2012 We increased broadband penetration through the development of Indonesia Wi-Fi to as part of our “Indonesia Digital Network” program. We reconfigured our business portfolio from TIME to TIMES Telecommunication, Information, Media, Edutainment Service to increase business value creation. 2013 As of 2013, we have been operating in seven countries, namely, Hong Kong-Macau, East Timor, Australia, Myanmar, Malaysia, Taiwan, and the United States of America. 2014 We were the first operator in Indonesia to commercially launch 4G LTE services in December 2014. - 31 - Table of Content AWARDS AND CERTIFICATIONS AWARDS No Date Awards Given By 1 January 4, 2014 1 st in Infrastructure, Utilities and Transportations, The Best 20 of Most Admired Companies in Indonesia, and Highest Leap in FIMAC Ranking Fortune Indonesia and Hay Group Indonesia Magazine 2 April 30, 2014 Platinum Winner Anugerah Kartini BUMN 2014, Executive General Manager, Enterprise Service Division BUMN Track and Leadership Inc 3 May 13, 2014 Best Issuer 2014 Capital Market Awards 4 May 14, 2014  TOP IT, TOP Green IT, TOP IT Solution, TOP Telco 2014  Top IT Agility in Telco 2014 for KartuHalo post paid, Simpati, and Kartu As prepaid, and Telkomsel Flash wireless internet  Top Data Center Services 2014, Top Cloud Application Provider 2014 TelkomSigma  Top Contact Center Solution 2014 Infomedia  TOP IT Innovation in IT Services for Health 2014 AdMedika TOP IT TOP Telco 2014 5 May 28, 2014 Platinum The Best Team Work, Platinum The Best Technology Innovation, Gold The Best Operation, Gold The Best Business Contribution, Gold The Best Technology Innovation, Silver The Best HR Retention Program, Silver The Best Operation, Silver The Best HR Retention Program, Silver The Best Business Contribution Indonesia Contact Center Association ICCA 6 May 30, 2014 Gold - Technology Company, Silver - Customer Service of The Year The 1 st Asia-Pacific Stevie Awards, Seoul 7 June 4, 2014 Internet Provider and Telecommunication Company Corporate Image Award – Indonesia’s Most Admired Companies IMAC, Frontier Consulting Group and Tempo Magazine 8 June 5, 2014 Best Managed Companies, Best Corporate Governance Best Investor Relations, Best CSR, Most Committed Company to a Strong Dividend Policy Finance Asia Best Managed Companies” “Corporate Image Award Indonesia’s Most Admired Companies IMAC” 2014, Frontier Consulting Group and Tempo Magazine 9 June 19, 2014 Best SME Service through Indonesia Digital Interpreneur IndiPreneur program, Project of The Year Indonesia Digital School IndiSchool Asia Communication Awards 2014, Total Telecom in Singapore 10 June 26, 2014 Best Sustainable Business Innovation Company in Green Telecommunication Technology and Best Green CEO 2014 Social Business Innovation Award 2014, Warta Ekonomi 11 July 16, 2014 Winner 2014 Indonesia MAKE Award Dunamis Organization Services 12 July 16, 2014 2 nd Rank Indonesia Top 100 Most Value Brand 2014, 1 st Rank In Strongest Indonesia Brands, 2 nd Rank of The Highest Brand Value Growth In Indonesia SWA and Brand Finance 13 July 31, 2014 Sustainable Marketing Excellence Award through Telkom Solution program, Marketing Campaign of the Year through Indonesia Digital School IndiSchool program, Effective Use of Marketing Communication Award through Indonesia Digital Entrepreneur IndiPreneur program, Marketing Professional of the Year 5 th CMO Asia Awards for Excellence in Branding Marketing 2014 in Singapore - 32 - Table of Content No Date Awards Given By 14 August 21, 2014 Gold Winner for Strategic Marketing Tactical Marketing, First The Best Chief Marketing Officer CMO BUMN Marketing Awards 2014 15 August 29, 2014 Best Listed Company of The Year, The Best CEO Listed Company 2014, CEO of The Year, 1 st winner for the category of Corporate Communication, 1 st winner for the category of Risk Management, 1 st winner for the category of Performance Group Infrastructure Anugerah Perusahaan Terbuka Indonesia 2014 16 September 23, 2014  Data Communication Service Provider of the Year, Telecom Service Provider of the Year 2014 Telkom,  Indonesia Green BTS Operator of the Year, Indonesia Mobile Broadband Service Provider of the Year, Indonesia Mobile Data Service Provider of the Year, Indonesia Mobile Service Provider of the Year Telkomsel  Contact Center Outsourcing Service Provider of the Year Infomedia  Data Service Provider of the Year Telkomsigma  Frost Sullivan Indonesia Excellence Awards 2014 20 November 28, 2014  Grand Platinum “Freedom of Associating and Assembling” category of Human Rights  Telkom Go Green Action: Mitigation of carbon dioxide emission and stimulation of Environment Friendly Business activities category of Environment  Telkom Customer Satisfaction Based on Global Customer Satisfaction Standard GCSS in the form of Measurement CSI and CLI category of Consumer  Indonesian CSR Awards 2014 ICA 2014  Indonesian CSR Awards 2014 ICA 2014 - 33 - Table of Content CERTIFICATION No Date Setification Receiver Given by Valid until 1 2013 ISO 9001:2008 PT Dayamitra Telekomunikasi Mitratel United Register for System URS 2016 2 2013 ISO 9001:2008 Divisi Business Service TUV Rheinland Cert GmbH 2016 3 2013 ISO 9001:2008 PT Telkom Akses TUV Rheinland Cert GmbH 2016 4 2012 ISO 9001:2008 PT Finnet DQS GmbH 2015 5 2012 ASNZS ISO 9001:2008 PT Administrasi Medika AdMedika Verification New Zealand Limited 2015 6 2012 ISOIEC 27001:2005 PT Finnet DQS Gmbh 2015 7 2012 ISOIEC 27001:2005 Divisi Infratel dan Divisi Access TUV Rheinland Japan Ltd 2015 8 2011 ISO 9001:2008 Divisi Telkom Flexi TUV Rheinland Cert GmbH 2014 9 2011 ISO 9001:2008 Divisi Enterprise Service TUV Rheinland Cert GmbH 2014 - 34 - Table of Content SIGNIFICANT EVENTS 2014 JANUARY 10 - Through subsidiary PT Sigma Cipta Caraka Telkomsigma, Telkom has the fourth and fifth data center in 2014. Data center specification tier 3 and 4 located in Balikpapan, East Kalimantan and industry area of Cikarang, West java. 22 - Telkom Group built 11 Integrated Services Posts for Mount Sinabung eruption refugees in Karo District, North Sumatra. Telkom Group also distributed food assistance, medicine, and clean water supply by deploying five cars. FEBRUARY 8 - Participating in the re-operation of Halim Perdanakusuma Airport for commercial flight, Telkom held Indonesia Wifi internet service Wifi.id at the airport. 14 - The Launching of UseeTV in conjunction with art performances of Erros Djarot 40 Years Opus at the Jakarta Convention Center. 21 - Telkomsel synergize with Telkom to bring the first Seamless Wi-Fi Mobile solution in Indonesia, Telkomsel Flashzone- Seamless that utilize Telkom Wi-Fi network as an additional cellular network. This collaboration provides the experience of surfing with high speed and stability. It also allows customers to switch network connection from 2G3G to Wi-Fi automatically auto connect. MARCH 6 - 7 Telkom Internasional Telin in cooperation with other 17 global telecommunication providers signed MoU of submarine cable development project, South East Asia - Middle East -Western Europe 5 SEA-ME-WE 5 in Kuala Lumpur, Malaysia 13 - Through subsidiary, Telkom Akses, Telkom accelerate the development of broadband infrastructure to fulfill the Government program in providing fast internet access throughout Indonesia. Broadband infrastructure will pass 20 million pointshouses up to 2015 in around 900 inhabited islands in Indonesia. Currently, Telkom broadband infrastructure only pass through 8,2 million houses. 27 - Telkom for the first time operate vending machine technology that is integrated with the e-ticketing service in Kualanamu International Airport, North Sumatra. This was stated by EBIS Director, Muhammad Awaluddin on the sidelines of the inauguration of the airport by the President of the Republic of Indonesia Susilo Bambang Yudhoyono. APRIL 4 Telkom Annual General Meeting of Shareholders AGMS with the agenda of to change the composition of Telkom Board of Commissioners and Directors. 22 The development of Telkom TMoney service starts to target on railway transportation service. KRL Jabodetabek e-ticketing has already reached 600.000 transactions each day. Out of that number, around 55 are multi trip card KMT users. 28 Telkom organizes an international certification training program called Indonesia Digital Creative, which is jointly held with Intel Indonesia Corporation and fully supported by MIKTI, IWAPI, and PGRI with a target of 100,000participants in 2015. JUNI 10 - Telkom launced WiFi Corner 100Mbps in Surabaya and Denpasar. This innovation was driven by the growing public demand to high-speed data access. - 35 - Table of Content JULY 10 - Telkom supports the Indonesian digitization program in 2015 to enhance the global competitiveness, especially in technology and communications. This was announced by the Director of ISP, Indra Utoyo, when met with the Minister of Communications and Information, Tiffatul Sembiring and Hermawan Kartajaya at the GMP, Jakarta. 22 - Telkom launched Delima Remittance service in Taiwan for providing remittance service for Indonesian people in Taiwan. The launched was marked by the signing of Cooperation Agreement between President Director of Finnet Indonesia Telkom subsidiary, Otong Iip with Director of Indonesia Delivery Service Index Chou Lin Chieh in Taipei City, Taiwan. AUGUST 17 - Enliven the momentum of Indonesian 69 th Independence Day, Telkom received an award from the Indonesian Record Museum on the success of holding 1.000 WiFi.ID Corner 100 Mbps throughout Indonesia within a month. MURI award was presented by the Director, Jaya Soeprana at the Independence Day ceremony in the courtyard GMP Building, Jakarta. SEPTEMBER 17 – 18 Telkom presented performance exposure through the Investor Summit and Capital Market Expo held at The Ritz-Carlton Pacific Place Jakarta. OCTOBER 20 - Telkom provides full support in one of the activities of People Thanksgiving, which was Video Conference President Joko Widodo with People. Telkom provide the services of Video Conference or the so-called e-Blusukan followed by volunteers from eight cities. NOVEMBER 3 - Director of Enterprise Business Service Telkom launched CRM Mobile Apps of UKM Hebat Terrific SME named Zapa in Jakarta. Telkom targeted, in 2015 there will be 1.000.000 SMEs involved and connected with various applications that have been developed. DECEMBER 19 - Extraordinary General Meeting of Shareholders, with the agenda of altering the compositition of Telkom Board of Commissioners and Board of Directors. - 36 - Table of Content CORPORATE IDENTITY TELKOM INDONESIA LOGO The new logo of the Company established based on the Companys Regulations No. PD.201.032014 on New CorporateBrand Identity dated June 20, 2014. Tagline: The world in your hand Which in Bahasa Indonesia means “Dunia dalam genggaman Anda”, where the message conveyed is that Telkom will make everything easier and more enjoyable in accessing the world Meaning of Logo Referring to Telkom Corporate philosophy, which is Always The Best - a basic belief to always provide the best in every job completed and continually amend ordinary condition becoming better, and eventually led to become the best. Color Philosophy Red - Courage, Love, Energy, Tenacious Reflects the spirit of Telkom to always optimistic and brave in facing the challenges and the company. White - Holy, Peace, Light, Unite Reflects the spirit of Telkom to provide the best for the nation. Black - Basic Colors Symbolizes determination. Grey – Transition Color Symbolizes technology. VISION AND MISSION Our vision and mission is stated in our long-term plan approved by the Board of Commissioners on May 30, 2014 by the Decree of the BOC No. 11KEPDK2014RHS and amendment approved on December 31, 2014 by the Decree of the BOC No. 18KEPDK2014RHS. Vision To become a leading Telecommunication, Information, Media, Edutainment and Services TIMES player in the region. Mission • To provide more for less service with respect to TIMES. • Being exemplary of best corporate management in Indonesia. - 37 - Table of Content Explanation on Vision and Mission Leading means that our performance on the financial aspects revenues and profits and market capitalization is included into the flagship telecom operators group both with only a telecommunication portfolio and Times in the region. Region means Asian region, so that our performance will be compared with the telecom operators in the region. More for Less is a new business model that emphasizes benefits than price. This business model is often called as Paradox Marketing, which provide benefits or value more at a lower price for less. The service and quality service are developed by Telkom Quality System based on international standards. We manage business using the best methods and tools applied by the world-class companies so that we are expected to be the best company in Indonesia and a role model for other companies. CULTURE VALUES Telkom Corporate Philosophy : Always The Best Telkom Leadership Architecture The Telkom Way : : Lead by Heart, Managed by Head Solid-Speed-Smart THE TELKOM CORPORATE PHILOSOPHY: ALWAYS THE BEST Corporate Philosophy Always the Best is a basic spirit to continuously provide the best in every job. Always the Best is a mental attitude to become the best, which has the essence of Ihsan, which contains three meanings; repair, better, and best. TELKOM LEADERSHIP ARCHITECTURE: LEAD BY HEART, MANAGED BY HEAD The Leadership Architecture contains three core elements are referred to as 3P, namely philosophy, principle and practice. Leadership Philosophy to be the Best is the basic belief that contains basic philosophies for the whole range of Telkom to be the best leader; basic belief that should always create harmony between the Heart and Head 2H and create synergies between the Spirit and Strategy 2S; and commitment that should always be embedded within the whole range. Leadership Principles to be the Star is the core values that contain the basic principles to be the star leader that include two core values, namely; Lead by Heart Managed by Head. Principles Lead by Heart and Managed by Head are interpreted into the behavior practices in achieving its goal, which is to become a winner in TIMES business competition. Leadership Practices to be the Winner is standard behaviors that contain noble practices to become the winner leader. THE TELKOM WAY: SOLID – SPEED - SMART The Telkom Way contains 3P three core elements, namely philosophy, principle, and practice. Philosophy to be the Best: Always The Best Philosophy Always the Best is the basic belief that contains basic philosophies for the whole range of Telkom to be the best being. Principles to be the Star: Solid-Speed-Smart 3S Principles to be the Star, which is the core value that contains the basic principles to be the star being. Principle to be the Star contains three core values called 3S: Solid, Speed, Smart. Solid is the realization of one heart pure heart, one mind, and one action. Solid is an interpretation of the first Always the Best, namely integrity. Speed is to act rapidly in every job. Speed is an interpretation of the second elements Always the Best, namely enthusiasm. - 38 - Table of Content Smart is to behave, to think, and to act intelligently in every job through sharp intuition, the course of ratio through creativity and innovation that produces breakthrough, and the course of body through impressive actions. Smart is the interpretation of the third elements of Always the Best, namely totality. Practices to be the Winner: Imagine-Focus-Action Practices to be the Winner are standard behaviors that contain noble practices to become a winner being. Practices to be the winner containing standards of behavior: imagine - Focus - Action. ARTICLES OF ASSOCIATION Articles of Association of the Company Articles of Association has been registered under the Limited Liability Company Law No.11995 and has been approved by the Minister of Justice of the Republic of Indonesia based on the Decree of Ministry of Justice No.C2-7468.HT.01.04.TH.97 of 1997. In connection with the issuance of the Limited Liability Company Law No.402007, which replaced the Limited Liability Company Law No.11995, the Company has adjusted its Articles of Association and has been approved by the Minister of Law and Human Rights of the Republic of Indonesia based on the Decree of Ministry of Justice and Human Rights No.AHU.46312.AH.01.022008 dated July 31, 2008 and was registered in the State Gazette of the Republic of Indonesia No.84 dated October 17, 2008, Appendix Official Gazette No.20155. Amendments to the last Articles of Association include changes in the capital structure through a stock split of the Company from Rp 250, - to Rp50, - and the suppression of the Partnership and Community Development Program from the content of the Company’s Work Plan and Budget. Amendments to the Articles of Association has been carried out based on notarial deed Ashoya Ratam, SH, Mkn. No.11 dated May 8, 2013. Notification of the amendment has been received by the Minister of Justice and Human Rights of the Republic of Indonesia by virtue of No.AHU-AH.01.10-22500 dated June 7, 2013. PRODUCTS AND SERVICES Corresponding to the Article of Association, the Company’s main business is telecommunication services that include fixed wireline and fixed wireless, mobile communication, network and interconnection service, as well as internet service and data communication. We also provides various services in the field of information, media and edutainment, including cloud-based and server based managed services, e-Payment and IT enabler, e-Commerce and other portal services. Telkom continues to innovate in other sectors than telecommunications and to build synergy among the entire products, services and solutions. To increase business value, in 2012, we transform its business portfolio into TIMES Telecommunication, Information, Media and Edutainment Service. To run the business portfolio, based on the Board of Executive we classify subsidiaries into four groups, they are; cellular business led by Telkomsel, international business led by Telin, multimedia business led by Telkom Metra, and infrastructure business led by Telkom Infra. Telecommunication We serve fixed services fixed phone, fixed broadband and Wi-Fi, mobile services full and limited mobility, network infrastructure services interconnection international traffic, network services, satellite and tower. Information Information services consist of platform services managed application SI, BPM, e-payment, premise integration, data center cloud, M2M, big data and ecosystem solution e-health, e-logistics, e-tourism, e-transportation and e-governance. Media and Edutainment Media and Edutainment services offered digital life, digital home and digital advertising. Services Services became one of the Companys business model oriented to the customer. This is in line with our Customer Portfolio to Personal customer, ConsumerHome, Business, Enterprise, Wholesale, and International. - 39 - Table of Content STRATEGIC OBJECTIVE TELKOM We have defined our corporate strategies broadly as follows: 1. Directional Strategy : Sustainable competitive growth 2. Portfolio Strategy 3. Parenting Strategy : : Converged TIMES portfolio Strategic guidance Directional Strategy refers to a sustainable competitive growth strategy that supports and grows our market capitalization. Portfolio Strategy refers our strategy to develop a converged TIMES portfolio that provides seamless converged services multiservice in multi device by exploiting the synergies of the Telkom Group. Parenting Strategy calls for us to manage multiple businesses with different maturity levels. To support growth, the strategic guidance covers all aspects of planning and optimizing of synergies within the Telkom Group. To ensure that our business transformation is progressing well and thoroughly, from the Corporate to the Functional level, we applied the strategic formulation model in stages. Corporate Strategy consists of a strategic situation analysis SSA, Strategy Formulation SF, Strategy Implementation SI, Strategy Evaluation Control SEC, and translating those deeper at the various levels from Division to Functional level. - 40 - Table of Content TRADEMARKS, COPYRIGHTS, INDUSTRIAL DESIGNS AND PATENTS We constantly seek to develop product and service innovations in line with a dynamic business portfolio. To provide both protection for and recognition of the creativity involved, we have registered a number of intellectual property rights, including trademarks, copyrights, industrial design and patents with the Directorate General of Intellectual Property Rights Ditjen HKI at the Ministry of Law and Human Rights of the Republic of Indonesia. The intellectual property rights we have registered include: i trademarks for our products and services, corporate logo and name; ii copyrights on our corporate name and logo, product and service logos, computer programs, research and songs; and iii simple and ordinary patents on technological inventions in the form of telecommunications products, systems and methods. The following table lists the trademark submitted for the application registration for the period of 2013 and 2014: No Title Application No. Application Date 1 IndiHome J002014043700 September 25, 2014 2 t-money J002014028601 June 23, 2014 3 Bos Toko J002014028602 June 23, 2014 4 Telkom Indonesia J002014028603 June 23, 2014 5 Telkom Indonesia with tag line “the world in your hand” J002014028604 June 23, 2014 6 Delima new logo J002014028605 June 23, 2014 7 U See Zone J002013014812 April 2, 2013 8 UTV J002013014813 April 2, 2013 9 U Zone J002013014814 April 2, 2013 10 U J002013014815 April 2, 2013 11 U meet me J002013022833 May 16, 2013 The following table lists of registration letter of copyrights accepted for the period of 2014: No Innovation Title Application No. Application Date Registration Date Innovation Number 1 “Super Resolution in Speedy Monitoring” Computer Program C00201400479 February 5, 2014 March 17, 2014 67906 2 “Monitoring Penerimaan Pendapatan Tunai ” Computer Program C00201400480 February 5, 2014 March 17, 2014 67907 3 “Kesehatan Ibu dan Anak KIA Online” Computer Program C00201400481 February 5, 2014 March 17, 2014 67908 4 “Upoint” Computer Program C00201400482 February 5, 2014 March 17, 2014 67909 5 “Wifi.id finder” Computer Program C00201400483 March 14, 2014 March 14, 2014 67827 The following table lists the copyrights that have been registered by us in 2013 and 2014: No Innovation Title Application No. Application Date Registration Date Innovation Number 1 “Super Resolution in Speedy Monitoring” Computer Program C00201400479 February 5, 2014 March 17, 2014 67906 2 “Monitoring Penerimaan Pendapatan Tunai ” Computer Program C00201400480 February 5, 2014 March 17, 2014 67907 3 “Kesehatan Ibu dan Anak KIA Online” Computer Program C00201400481 February 5, 2014 March 17, 2014 67908 4 “Upoint” Computer Program C00201400482 February 5, 2014 March 17, 2014 67909 5 “Wifi.id finder” Computer Program C00201400483 March 14, 2014 March 14, 2014 67827 We did not submit or register any patents in 2013 and 2014. - 41 - Table of Content MANAGEMENT OF TELKOM INDONESIA In accordance with Telkom Annual General Meeting of Shareholders AGMS on April 4, 2014, the composition of the Board of Commissioners and Directors are as follows: Commissioners Jusman Syafii Djamal Parikesit Suprapto Hadiyanto Gatot Trihargo Johnny Swandi Sjam Virano Gazi Nasution : : : : : : President Commissioner Commissioner Commissioner Commissioner Independent Commissioner Independent Commissioner Directors Arief Yahya Honesti Basyir Indra Utoyo Sukardi Silalahi Muhammad Awaluddin Rizkan Chandra Priyantono Rudito Ririek Adriansyah : : : : : : : : President Director Director Director Director Director Director Director Director In accordance with Extraordinary General Meeting of Shareholders EGMS on December 19, 2014, the composition of the Board of Commissioners and Board of Directors went through some changes. Commissioners Hendri Saparini Dolfie Othniel Fredric Palit Imam Apriyanto Putro Hadiyanto Parikesit Suprapto Johnny Swandi Sjam Virano Gazi Nasution : : : : : : : President Commissioner Commissioner Commissioner Commissioner Independent Commissioner Independent Commissioner Independent Commissioner Directors Alex J. Sinaga Indra Utoyo Abdus Somad Arief Heri Sunaryadi Herdy Rosadi Harman Dian Rachmawan Honesti Basyir Muhammad Awaluddin : : : : : : : : President Director Director Director Director Director Director Director Director - 42 - Table of Content TELKOM ORGANIZATIONAL STRUCTURE We have adopted a holding company approach to corporate management, which we believe will provide productive flexibility for all our business entities in accordance with the needs of the respective units. In implementing this holding company approach: 1. the role of the corporate office is focused on the Corporate Level Strategy function i.e. directing overall strategy, portfolio strategy and parenting strategy. 2. we tailor parenting style to the particular characteristics of the business entity. 3. we seek to empower each business entity in line with their respective particular characteristics. In addition, we introduced the Board of Executives to improve our parenting mechanism. The Board’s membership comprises all members of Telkom’s Board of Directors and a number of Chief of Business. The Chiefs of Business title is reserved for senior business experts, who are our senior executives and horizontally positioned equivalent to our Directors. Our Chief of Business is meant to serve in formulating corporate level strategy decisions as well as fostering a harmonious relationship between subsidiaries and the parent. Furthermore, we divide our management of subsidiaries into four categories. Telin manages our international subsidiaries, namely Telin Singapore, Telin Australia, Telin Malaysia, Telin Hong Kong and Telkomcel. Telkomsel manages the cellular business. Telkometra manages the media value chain, namely MetraPlasa, Melon, Sigma, Metranet, Infomedia, Admedika, PINs, Finnet, MDM, Pointer and MetraTV. Telkominfra manages the infrastructure and ecosystem business, namely Mitratel, Patrakom, Telkom Akses and Telkom Property. - 43 - Table of Content Telkom’s Organizational Structure - 44 - Table of Content Directorate Function and Authority Network, IT Solution “NITS” Directorate Focuses on managing the Infrastructure Strategy and Governance, IT Strategy and Governance, and Solution, as well as managing the IT utilization and service operation and management, in order to support the capitalization of established businesses and also controlling infrastructure operations through the Network of Broadband, Information System Center Division, Wireless Broadband Division and Broadband Division. Innovation Strategic Portfolio “ISP” Directorate Focuses on managing the functions of corporate strategic planning, strategic business development, innovation strategy and synergy, as well as the operational management of the Digital Business Division and Innovation and Design Center units. Consumer Service “CONS” Directorate Focuses on managing the consumer product planning, consumer realtionship amagement, consumer marketing and sales and consumer service supervision. Enterprise Business Service “EBIS” Directorate Focuses on managing marketing and operation aligment, enterprise business strategy, enterprise service, business service, through the Enterprise Services Division and Business Services Division. Wholesale International Service “WINS” Directorate Focuses on managing the wholesale and international business segment, and the operational management of the Wholesale Services Division. Human Capital Management “HCM” Directorate Focuses on managing the company’s human resources and the operational management of human resources centrally through the Human Capital Center unit, as well as controlling operations of the Telkom Corporate University Center, Assessment Center Indonesia, and Community Development Center units. Finance “FIN” Directorate Focuses on the company’s financial management through Corporate Finance unit, Management Accounting unit, Investor Relations unit, Financial Logistic Policy, Risk and Process Management unit, and managing financial operations centrally through the Finance, Billing and Collection Center unit. BOARD OF COMMISIONERS PROFILE DR. HENDRI SAPARINI PRESIDENT COMMISSIONER Personal Born : Kebumen, June 16, 1964. Age : 50 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis President Commissioner, appointed based on the result of Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bachelor of Arts in Economics from Gajah Mada University 1988; Master in International Development Policy from Tsukuba University, Japan and a doctorate degree in International Political Economy from Tsukuba University, Japan . Career Hendri Saparini was a Expert Staff of Minister of Cooperation and SMEHead of Indonesian SME Development Agency, Economic Lecturer on Magister Management Gajah Mada University, Magister Management Faculty of Development Studies Bandung Institute of Technology, Doctoral Program Economic Faculty UMS, Economic Consultant in several financial institutions, Bank Indonesia, and international institution, as well as Managing Director Centre of Reformation CORE Indonesia. - 45 - Table of Content DOLFIE OTHNIEL FREDRIC PALIT COMMISSIONER Personal Born : Kijang, Riau Islands, October 27, 1968. Age : 46 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Commissioner, appointed by Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bandung Institute of Technology, 1995 Career Dolfie Othniel Fredric Palit has served as Executive Director at Yayasan Bumi Indonesia 2001-2003, Executive Director at the Institute for Strategic Consultant Strategic Planning Research Policy and Regional Autonomy - REKODE 2004 - 2009, as a member of the House of Representatives 2009 - 2014 , Member of Special Committee Act of Prevention and Combating Money Laundering, Bank Century Supervisory team Member, Member of Budget Committee of the House of Representatives, and Member of the Special Committee of the Law on BPJS. IMAM APRIYANTO PUTRO COMMISSIONER Personal Born : Cilacap, March 22, 1964. Age : 50 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Commissioner, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Imam Apriyanto Putro served as Telkom Commissioners since April 2014. Education Economic Faculty Diponegoro University Semarang, Magister Management from Institut Bisnis Indonesia IBI Jakarta, and a doctotare degree Management from State University Jakarta. Career Imam Apriyanto Putro was the Commissioner of PT Semen Indonesia Tbk and currently served as the Secretary of Ministry of SOE. HADIYANTO COMMISSIONER Personal Born : Ciamis, October 10, 1962 Age : 52 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia. Position and Appointment Basis Commissioner, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Hadiyanto served as Telkom Commissioners since May 11, 2012. Education Law degree from the University of Padjadjaran, Bandung, Master of Law LLM from Harvard University Law School, USA, and a doctorate degree in Legal Studies from the University of Padjadjaran, Bandung. Career Currently Hadiyanto also served as the Director General of State Assets in the Ministry of Finance. Previously, Hadiyanto served as Head of the Legal Secretariat General of the Ministry of Finance, and Alternate Executive Director of the World Bank. In the corporate environment, Hadiyanto has served as President Commissioner of PT Garuda Indonesia Tbk 2007 - 2012 and President Commissioner of PT Bank Ekspor Indonesia 2007 - 2009. - 46 - Table of Content JOHNY SWANDI SJAM INDEPENDENT COMMISSIONER Personal Born : Jakarta, August 15, 1960. Age : 54 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Independent Commissioner, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Johny Swandi Sjam served as Telkom Independent Commissioners since January 1, 2011. Education Diploma III of Computer Engineering from Bandung Institute of Technology, Diploma IV in Industrial Management from the School of Industrial Management Department of Industry, Bachelor of Informatics Management from Gunadarma University, Jakarta, and Masters in Business Administration and Policy from the University of Indonesia, Jakarta. Career Johny Swandi Sjam has served as Commissioner of PT INTI 2010 - 2011, President Director of PT Indosat Tbk 2005 - 2007, President Director of Satelindo 2002 - 2003 and several other important positions in subsidiaries Indosat such as Sisindosat and Intikom 1997 - 2002 PARIKESIT SUPRAPTO COMMISSIONER Personal Born : Surabaya, August 8, 1951 Age : 54 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Independent Commissioner, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Parikesit Suprapto served as Telkom Independent Commissioners since May 11, 2013. Education Bachelor in Corporate Economics from Sekolah Tinggi Manajemen Industri 1980, Master in Economic Development from Indiana University, USA 1990; and doctorate degree in Economic Development from Notre Dame University, Indiana, USA 1995. Career Currently serving as commissioner of Indonesian Central Securities Depository. Parikesit Suprapto served as Deputy for Services, the Ministry of SOEs 2010 - 2012, Deputy for Banking and Financing Industry, the Ministry of SOEs 2008 - 2010, and Advisor to the Minister of Cooperatives and SMEs Small Business Sector 2006 - 2008. In the corporate environment, Parikesit Suprapto served as Commissioner of PT Indosat Tbk 2011 - 2012 and Commissioner of PT Bank Negara Indonesia Persero Tbk. VIRANO GAZI NASUTION INDEPENDENT COMMISSIONER Personal Born : Bandung, August 23, 1968 Age : 46 Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Independent Commissioner, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Virano Nasution served as Telkom Independent Commissioners since May 11, 2012. Education Bachelors degree in the field of Systems Engineering, University of Arizona and a masters degree in Economic Engineering, Stanford University, USA. Career Virano Gazi Nasution served as Commercial Director of PT Indonesia Comnet Plus, a subsidiary of PT PLN 2009 - 2012, Expert Staff to the Minister of Communications and Informatics Technology 2008 - 2009, and President Director of PT Bakrie Telecom Tbk 2001 - 2005. - 47 - Table of Content BOARD OF DIRECTOR PROFILE ALEX J. SINAGA PRESIDENT DIRECTOR Personal Born : Pematang Siantar, September 27, 1961. Age : 53 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis President Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bachelor degree of Electronic Telecommunications of Bandung Institute of Technology and Master of Telematics of the University of Surrey, Guidford-UK. Career Alex J. Sinaga previously served as President Director of Telkomsel, President Director of PT Multimedia Nusantara, Division Head of Fixed Wireless Networks, Head of Enterprise Services, President Commissioner of PT Sigma Cipta Caraka, and Vice President of Toba Lake Golf Club, General Manager Telkom West Jakarta, Senior Manager of Performance - Regional Division II Jakarta. ABDUS SOMAD ARIEF DIRECTOR Personal Born : Sidoarjo, September 25, 1963. Age : 51 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bachelor degree of Electrical Engineering of Bandung Institute of Technology and Master of Information Systems and Technology of Bandung Institute of Technology. Career Abdus Somad Arief’s career mostly in Telkom. Previously, Abdus Somad Arief was Director of Network Telkomsel, Executive General Manager - Enterprise Service Division Telkom 2009 - 2012, Vice President of Business Development - Enterprise Wholesale Telkom 2008 - 2009, and Deputy Executive General Manager of the Enterprise Service Division Telkom 2007 - 2008. Abdus Somad Arief also been the President Commissioner of PT Pramindo Ikat Nusantara 2011 - 2012 and Commissioner of PT Infomedia Nusantara 2010 - 2011. MUHAMMAD AWALUDDIN DIRECTOR Personal Born : Jakarta, January 15, 1968. Age : 46 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bachelor degree of Electrical Engineering from Sriwijaya University 1990, Master of Business Administration from European University Antwerp Belgium 1998. Career Muhammad Awaluddin started his career at Telkom since 1991. Awaluddin has served as General Manager of Kandatel Bogor, General Manager of Kandatel Central Jakarta, Executive General Manager of Divre I Sumatra, Vice President of Public and Marketing Communications and Executive General Manager of the Division of Access. Previously, Awaluddin was the President Director of PT Infomedia Nusantara. - 48 - Table of Content HERI SUNARYADI DIRECTOR Personal Born : Jember, June 26, 1965. Age : 49 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia. Position and Appointment Basis Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bachelor Degree Faculty of Agriculture from Bogor Agricultural University 1987. Career Heri Sunaryadi previously was the President Director of PT Bahana Pembinaan Usaha Indonesia Persero in 2009 - 2013 and President Director of PT Kustodian Sentral Efek Indonesia 2013 - 2014. HONESTI BASYIR DIRECTOR Personal Born : Padang, June 24, 1968. Age : 46 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bachelor Degree of Industrial Engineering from Bandung Institute of Technology 1992 and Master Degree of Corporate Finance from Sekolah Tinggi Manajemen Bandung 2004. Career Honesti Basyir has served as Finance Director of Telkom 2012 - 2014, Vice President of Strategic Business Development Directorate of IT Solutions and Strategic Portfolio Telkom. Assistant Vice President of Business and Finance Analysis and Project Controller-1 Project Management Office Telkom. HERDY ROSADI HARMAN DIRECTOR Personal Born : Bandung, June 28, 1963. Age : 51 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Bachelors Degree of Law from University of Padjadjaran, Bandung, MBA from the Asian Institute of Management Philippines- Institute Management BandungTelkom University, and Master of Law LLM from Washington College of Law, DC, USA. Career Herdy Rosadi Harman previously served as the Director of Human Capital Management Telkomsel 2012 - 2014. Herdy Rosadi Harman served as Vice President of Legal Compliance Telkom 2006 - 2007 as well as Vice President of Regulatory Management Telkom 2007 - 2012. - 49 - Table of Content DIAN RACHMAWAN DIRECTOR Personal Born : Bangil, May 14, 1964. Age : 50 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Education Master in Telecommunication Engineering of Bradford University, England. Career Dian Rachmawan previously was the CEO of PT Telekomunikasi Indonesia International Hong Kong Limited or Telin HK. INDRA UTOYO DIRECTOR Personal Born : Bandung, February 17, 1962. Age : 52 years. Citizenship and Domicile Indonesian citizen, domiciled in Indonesia Position and Appointment Basis Director, appointed based on Telkom Extraordinary General Meeting of Shareholders EGMS on December 19, 2014. Indra Utoyo served as Director since February 28, 2007 and had served as Acting President Director by virtue of the BOC No.201SRTDK2014 dated October 31, 2014. Education Bachelor of Electrical Telecommunication Engineering from Bandung Institute of Technology and Master Degree in Communication and Signal Processing from Imperial College of Science, Technology and Medicine, University of London, England. Career Indra Utoyo joined Telkom since 1986. Indra Utoyo has served as a Senior General Manager of Information System Center Telkom, and Director of IT Solutions Supply Telkom. - 50 - Table of Content EXECUTIVES PROFILE Position Name Senior Vice President Corporate Secretary Department Triana Mulyatsa Senior Vice President Program Management Office Department Ikhsan Head of Internal Audit Mohammad Nuhin Vice President Corporate Communication Arif Prabowo Vice President Regulatory Management Henry Christiadi Vice President Corporate Office Support Dodi Irawan Vice President Legal and Compliance Rudy Agustian Vice President Infrastructure and Operations Audit Rubi Handojo Vice President Support and Subsidiary Audit Purwadi Siswana Vice President Enterprise Management Audit Purwoto Vice President Financial and Logistic Policy Agus Hery Prasetyo Vice President Management Accounting Edi Witjara Vice President Corporate Finance Roby Roediyanto Vice President Risk and Process Management Jajat Sutarjat Vice President Supply Planning and Control I K Dody Wirawan Vice President Investor Relation Andi Setiawan Senior General Manager Finance Billing and Collection Center Martinus Wisnu Adji Senior General Manager Supply Center Weriza Vice President Human Capital Policy Aris Hartoni Vice President Organization Development Danang Baskoro Vice President Industrial Relation Djonet Hartono Vice President Telkom Smart Office Ardi Purwanto Senior General Manager Human Capital Center Nurdito Waluyo Senior General Manager Telkom Corporate University Center Dwi Heriyanto B. Senior General Manager Assessment Center Indonesia Rini Lestari Utami Senior General Manager Community Development Center Nur Hassim Haji Rusdi Vice President Corporate Strategic Planning Andy Revara Executive Vice President Strategic Investment NA Vice President Strategic Investment Execution Setyanto Hantoro Vice President Strategic Investment Planning Yusuf Wibisono - 51 - Table of Content Position Name Vice President Innovation Strategy IGN. Wiseto Prasetyo Agung Senior Vice President Synergy Department Joddy Hernady Executive General Manager Digital Business Achmad Sugiarto Senior General Manager Innovation Design Center Saiful Hidajat Vice President Consumer Product Planning Teni Agustini Vice President Consumer Relationship Management Agus Winarno Vice President Consumer Marketing Sales Jemy Operational Vice President Consumer Service Supervision Sujito Vice President Marketing Operation Alignment Bagyo Nugroho Vice President Enterprise Business Strategy Wisnu Haryadi Vice President Enterprise Service Indrawan Ditapradana Vice President Business Service Ilmianto Executive General Manager Enterprise Service Division Siti Choiriana Executive General Manager Business Service Division Yusron Hariyadi Executive General Manager Government Service Division Mohammad Salsabil Vice President Wholesale International Development Mohamad Ramzy Vice President Wholesale International Voice Service Erik Orbandi Vice President Wholesale International Network Service Budi Satria Dharma Purba Executive General Manager Wholesale Service Division Faizal Rochmad Djoemadi Vice President Infrastructure Service Governance Arief Musta’in Vice President IT Strategy Governance Alip Priyono Vice President Solution Dani Ramdani Executive General Manager Broadband Division Revolin Simulsyah Executive General Manager Wireless Broadband Division Pramasaleh Hario Utomo Executive General Manager Network of Broadband Division Era Kamali Nasution Executive General Manager IT Service Solution Division Halim Sulasmono Executive General Manager Regional 1 Division Teuku Muda Nanta Executive General Manager Regional 2 Division Prasabri Pesti Executive General Manager Regional 3 Division Suparwiyanto Executive General Manager Regional 4 Division Rosydul Umam Aly Executive General Manager Regional 5 Division Iskriono Windarjanto Executive General Manager Regional 6 Division Joko Raharjo Executive General Manager Regional 7 Division Mohammad Firdaus - 52 - Table of Content TELKOM BUSINESS GROUP To perform a business portfolio according to the principles of good corporate governance and best practices, as well as with regard to the provisions of legislation in force, Telkom Group formed a Board of Executive BOE, facilitating parenting mechanism towards subsidiaries. Subsidiaries are divided into category, the cellular business led by Telkomsel, media led by Telkom Metra, infrastructure led by Telkom Infra, and international led by Telin. TELKOM BUSINESS GROUP STRUCTURE Business group structure and composition of the Telkom Groups shares are presented in the following diagram. SUBSIDIARIES AND ASSOCIATED COMPANIES According to the Telkom Group Board of Executive Charter that was decided on December 19, 2013, the management structure grouped by Corporate Strategic Scenario “CSS”. CSS is set up a framework of rules, basic principles, and reference in the management as well as the mechanism of the relationship between the subsidiary and us in an integrated manner. CSS is applied in order to achieve the objectives of the company with the principles of Good Corporate Governance GCG and best practices, as well as taking into account the legislation in force. The following table presents the company structure, including the direct and indirect holdings in various subsidiaries, which are divided into cellular business, international, media, and infrastructure category. - 53 - Table of Content Subsidiaries and Associated Companies in Cellular Business Category Company Shareholdings Line of Business Operation Status Description PT Telekomunikasi Selular “Telkomsel”, Jakarta 65 Telecommunication Operate Telkomsel, was established on May 26, 1995, provides telecommunications and mobile phone service. Using the Global System for Mobile Communication technology GSM. Subsidiaries and Associated Companies in International Business Category Company Shareholdings Line of Business Operation Status Description PT Telekomunikasi Indonesia International “Telin”, Jakarta 100 Telecommunication Operate Previously known as PT Ariawest International, Telin was acquired on July 31, 2003 and is a wholly owned subsidiary of Telkom. Currently, Telin has obtained the fixed closed network “Jartaptup” license and Network Access Provider license. Telin provides network services and international telecommunication services, as well as international business. Telekomunikasi Indonesia International Pte. Ltd. “Telin Singapore”, Singapore 100 through Telin Telecommunication Operate Telin Singapore was established on December 6, 2007 pursuant to the laws of the Republic of Singapore. Telin Singapore is a wholly own subsidiary of Telin Indonesia. The license owned is Facility Based Operator. The service currently provided is wholesale data and Managed Service. Telekomunikasi Indonesia International Hong Kong Limited. “Telin Hong Kong, Hong Kong 100 through Telin Telecommunication Operate Telin Hong Kong was established in Hong Kong on December 8, 2010 a wholly owned subsidiary of Telin. Telin Hong Kong obtained Unified Carrier License on March 1, 2011, Service Based Operator for MVNO on July 27 2011 and License for Operating Money Service on July 18, 2012. Currently, it provides wholesale voice, wholesale data and retail mobile services. The MVNO service is provided under the brand Kartu As 2in1. Telekomunikasi Indonesia International TL S.A. “Telin Timor Leste ”, Dili 100 through Telin Telecommunication Operate Telin Timor Leste was a subsidiary of Telin Indonesia, established on September 17, 2012. Telin Timor Leste has obtained radio spectrum and general registration certificate license. The service currently provided Fixed Telephone Connections; Mobile Connections; Internet Connections; Traffic-Fixed Line; Traffic-Mobile Telekomunikasi Indonesia International Pty Ltd.,Australia “Telkom Australia”, Melbourne 100 through Telin Telecommunication business and IT- based services Operate Telkom Australia is a subsidiary owned exclusively by Telin Indonesia. Established on January 14, 2013 by running Business Process Outsourcing BPO, Information Technology Outsourcing ITO, and Telecomunication Services. Telkom Macau Limited, Macau 100 through Telin Hong Kong MVNO Service Operate Telkom Macau is a subsidiary of Telin Hong Kong Limited, which was established on May 13, 2013. - 54 - Table of Content Company Shareholdings Line of Business Operation Status Description Telkom Taiwan Limited, Taipei City 100 through Telin Hong Kong MVNO Service Operate Telkom Taiwan is a subsidiary of Telin Hong Kong Limited, which was established on June 3, 2013. Telekomunikasi Indonesia International USA Inc., Los Angeles 100 through Telin Telecommunication and IT Operate Telekomunikasi Indonesia International USA Inc. is a subsidiary that entirely owned by Telin Indonesia. Established on December 11, 2013. Telekomunikasi Indonesia International Malaysia Sdn. Bhd., Kuala Lumpur 49 through Telin Telecommunication, MVNO Service Operate Telekomunikasi Indonesia International Malaysia Sdn. Bhd.s a joint venture company with Compudyne. Sdh. Bhd, providing MVNO after receiving Applications Service Provider Class ASPCC license on July 23, 2013 and Network Service Provider “NSP” on August 23, 2013. Officially operated on August 25, 2013. Subsidiaries and Associated Companies in Media Business Category Company Shareholdings Line of Business Operation Status Description PT Multimedia Nusantara “Telkom metra”, Jakarta 100 Telecommunications networks and multimedia services Operate Telkom Metra, founded on May 9, 2003, managing ourmultimedia bussines . Telkom Metra provides the development service, construction, and network maintenance as well as multimedia services data communication system services, portal services, and online transaction services. PT PINS Indonesia “PINS”, Jakarta 100 Services and telecommunications development Operate PINS was originally established to operate our KSO in Sumatra and was acquired on August 15, 2002. PT Patra Telekomunikasi Indonesia “Patrakom”, Depok 100 Services of satellite communication systems, related services and facilities for companies engaged in the oil industry Operate Patrakom was established on September 28, 1995. The Company acquired additional interest of 40 and 20 respectively of Patrakom PT Sigma Cipta Caraka “Telkomsigma”, Tangerang 100 through Telkom metra Informatics technology service – implementation and integration system, outsourcing, and license software maintenance Operate Telkomsigma was established on May 1, 1987 with a focus on provides IT and solutions service. - 55 - Table of Content Company Shareholdings Line of Business Operation Status Description PT Infomedia Nusantara “Infomedia”, Jakarta 100 including through 49 ownership of the Company Data and information services - providing telecommunications information services and other information services in print and electronic media, and call center services Operate Infomedia was acquired on September 22, 1999 to organize KSO in Sumatra. Infomedia has transforme from focusing on threepillars of business directory services, contact center services, and content services focus on business process outsourcing and digital media rich content service. PT Metra Digital Media “MD Media”, Jakarta 99,99 through Telkom metra Information telecommunication service Operate MD Media was established on January 22, 2013. PT Finnet Indonesia “Finnet”, Jakarta 60 through Telkom metra Banking communication and data Operate Finnet was established on October 31, 2005, as provider of IT infrastructure, applications, and content for information systems and financial transactions for the banking and financial services industries. PT Administrasi Medika “AdMedika”, Jakarta 75 through Telkom metra Administration and insurancehealth services Operate AdMedika was established on February 25, 2010, provides online claim service between the hospitals and health insurance companies. PT Metra Plasa “Metra Plasa”, Jakarta 60 through Telkom metra Portal service Operate Metra Plasa established on April 9, 2012 PT Metranet “metranet”, Jakarta 99,99 through Telkom metra Multimedia portal service Operate Metranet was established on April 17, 2009. PT Pojok Celebes Mandiri “pointer”, Jakarta 51 through Telkom metra Travel agentbureau service Operate Pointer was established on April 18, 2008. On August 30, 2013, Metra changed its ownership in pointer become 51. PT Satelit Multimedia Indonesia “SMI”, Jakarta 99,99 through Telkom metra Trade services and telecommunications network, satellite, and multimedia tools Operate SMI was established on March 25, 2013. PT Metra Digital Investama “MDI”, Jakarta 99,99 through Telkom metra Trading, supplier, construction services Operate MDI was established on January 8, 2013 PT Metra TV “Metra TV”, Jakarta 99,83 through Telkom metra Broadcasting subscription service Operate Metra TV was established on January 8, 2013. - 56 - Table of Content Company Shareholdings Line of Business Operation Status Description PT Indonusa Telemedia “TelkomVision”, Jakarta 20 including through 4,33 ownership by Telkom metra TV and content subscription Operate Established on May 7, 1997, Indonusa is a multimedia pay-TV, internet service service provider. Since 2007, Indonusa was the first Pay TV operator in Indonesia to launch DTH Prepaid Prepaid Satellite Pay TV, under the “TelkomVision” brand. On October 8, 2013, 1,036,059, 483 Indonusa shares equivalent to 80 of its ownership in Indonusa were sold to PT Trans Corpora and PT Trans Media Corpora. PT Integrasi Logistik Cipta Solusi “ILCS”, Jakarta 49 through Telkom metra E-trade logistic service and other related service. Operate Telkom Metra establishes ILCS with Pelindo II on September 21, 2012. PT Melon Indonesia “Melon”, Jakarta 51 through Telkom metra Digital Content Exchange Hub “DCEH” service Operate Melon is a joint venture company between Telkom and SK Telecom Korea. Melon was established on August 16, 2010. The Company expanded into media and edutainment business, providing digital music content and related content services for mobile phone, computer, consumer electronics channels, and other digital media. PT Citra Sari Makmur “CSM”, Jakarta 25 Provision of Communication Systems Micro Earth Station Very Small Aperture Terminal or VSAT, network application services and consulting services on telecommunications technology and related facilities Operate CSM was established on February 14, 1986. PT Pasifik Satelit Nusantara “PSN”, Jakarta 14.60 Satellite transponder leasing services and satellite-based communication services in the Asia Pacific region Operate PSN was established on July 2, 1991. PSN conduct an initial public offering of common stock shares with the National Association of Securities Dealers Automated Quotations NASDAQ in June 1996, but the company delisted on November 6, 2001, failed to meet NASDAQ National Market Listing requirments. - 57 - Table of Content Subsidiaries and Associated Companies in Infrastructure Business Category Company Shareholdings Line of Business Operation Status Description PT Infrastruktur Telekomunikasi Indonesia “Telkom Infra”, Jakarta 100 Telecommunication development service Operate On January 16, 2014, The Company established a subsidiary with the name of PT Infrastructure Telecommunications Indonesia. PT Dayamitra Telekomunikasi “Mitratel”, Jakarta 100 Telecommunication Operate Dayamitra provides fixed line telephone services, supply of telecommunications facilities and infrastructure and telecommunications services. Acquired on May 17, 2001, Dayamitra transformed it self by entering the telecommunications infrastructure supply business, which includes supplying telecommunications towers to meet the BTS installment needs of telecommunications operators all over Indonesia. On October 9, 2014, the Company signed a Conditional Shares Exchange Agreement with PT Tower Bersama Infrastructure Tbk TBI to exchange its 49 ownership in Dayamitra for 5.7 ownership in TBI. In addition, there is an option to exchange the Company’s remaining 51 ownership in Dayamitra within 2 years that will increase the Company’s ownership up to 13.7 in TBI. The completion of the agreement is subject to various approvals, including that of the stockholder of Dayamitra and TBI. As of the date of approval and authorization for the issuance of the consolidated financial statements, the transaction is still in progress PT Graha Sarana Duta “Telkom Property”, Jakarta 99,99 Office leasing and building management, maintenance service, civil consultant, and developer. Operate Acquired on April 25, 2001, Telkom Property operates throughout Indonesia and manages buildings owned by us and third parties. PT Telkom Landmark Tower “TLT”, Jakarta 55 through Telkom Property Property management and developer service. Operate Telkom Property establishes TLT with Yakes Telkom on February 1, 2012. PT Graha Yasa Selaras “GYS”, Jakarta 51 through Telkom Property Tourism service Not yet operating Telkom Property founded GYS together with Yakes Telkom on April 27, 2012 focused on hospitality services. PT Telkom Akses “Telkom Akses”, Jakarta 100 Construction, services and trade in telecommunications Operate Telkom Akses was established on November 26, 2012. - 58 - Table of Content Company Shareholdings Line of Business Operation Status Description PT Nusantara Sukses Sarana “NSS”, Jakarta 99,99 through Telkom Property Building management and hotel services Not yet operating NSN was established on September 1, 2014 PT Nusantara Sukses Investasi “NSI”, Jakarta 99,99 through Telkom Property Service and Trading Not yet operating NSI was established on September 1, 2014 PT Nusantara Sukses Realiti “NSR”, Jakarta 99,99 through Telkom Property Service and Trading Not yet operating NSR was established on September 1, 2014 STOCK OVERVIEW SHAREHOLDER COMPOSITION The authorized capital of the Company consists of 1 stock of Series A Dwiwarna, and 399.999.999.999 Series B stocks ordinary stocks. The authorized issued and fully paid capital of 100.799.996.400, consisting of 1 stock of Series A Dwiwarna and 100.799.996.399 Series B stocks. 1 stock of Series A Dwiwarna belongs to Government of the Republic of Indonesia Government so that the Government has special voting rights and rights to veto the filing, appointment and dismissal of the Board of Directors or Board of Commissioners, the issuance of new shares and amendments to the Articles of Association, including changes to merge or dissolve us before they expire, increase or decrease the authorized capital and reduce the subscribed capital. Company Shareholders per December 31, 2014 Series A Dwiwarna Share Series B Shares Common Stock Percentage of Ownership Government 1 51,602,353,559 52.56 Public 46,573,500,040 47.44 Capital Subtotal issued and outstanding 1 98,175,853,599 100.00 Treasury Stock 2,624,142,800 - Total 1 100,799,996,399 100.00 Composition of Telkom shareholders per December 31, 2014 is as follows:

1. Shareholders with Ownership More Than 5 MainControlling Shareholder